Andy Burnham has become the United Kingdom's Prime Minister with the real estate industry wanting clarity on his priorities quickly.
Burnham became the fifth Prime Minister in four years after his predecessor Sir Keir Starmer resigned on Friday following increasing unhappiness in the governing Labour Party at his unpopularity with the voting public. Burnham was invited to form a government by the King at Buckingham Palace and then travelled to Downing Street to give his first speech in power.
Speaking this afternoon, Burnham said he will lay out a 10-year plan for Britain later this year outlining the framework for taking the country where he wants it to be. He will also start explaining how he will give people more "breathing space" on the cost of living, starting from tomorrow, and pledged that more council homes will be built as the "fair and sustainable way" to bring the welfare bill down.
While Burnham is yet to confirm the policies he will bring forward on real estate, he used a speech on 29 June to outline a vision for the country that broadly includes commitments to devolution, a massive increase in council house building and business rates reform. He has also previously stated he wants to see major property tax reform, potentially via a land value tax.
Rebecca Shafran, head of commercial research, BNP Paribas Real Estate UK, said the consensus over the direction of travel is that there will be more devolved planning power, a renewed focus on land and property taxation, and a bigger role for the state in housebuilding. She said this could help to address real and long-standing problems in the United Kingdom’s housing and investment markets. "But it remains speculation at this point rather than policy, and that uncertainty is already a factor for investors and developers approaching investment decisions," Shafran said.
Shafran said BNPPRE is suggesting three things. "First, clarity. The sooner the government clearly sets out what it intends to do on property taxation, the sooner the market adjusts as prolonged speculation can be more damaging to investment and transaction activity than the policy itself. Second, meaningful engagement with the industry before any changes are finalised, particularly given the viability pressures already facing development. And lastly, sensible transition periods for any reform, providing reasonable time to adjust rather than sudden changes.
“Real estate has a critical role to play in the government’s growth and housing ambitions. Getting the sequencing and detail right will determine whether this becomes a genuine opportunity for the sector or a further source of uncertainty.”
Justin Young, chief executive of the Royal Institution of Chartered Surveyors, said the body that represents the surveying profession looks forward to working constructively with [Burnham's] government, "bringing our standards, data and professional expertise to support practical reform across housing, infrastructure and the built and natural environment".
Young said RICS will help Burnham to maintain the momentum behind the government’s recently announced home buying and selling reforms and "make their effective implementation an early" priority.
Vanessa Hale, chief executive, Real Estate:UK, says the new PM has waited a long time for this role and the real estate lobby group wishes him well. "Bringing forward the new housing and modern workplaces this country needs also takes a long time, too long. Mr Burnham will know from his time in charge of Manchester that creating a positive climate for investment results in more development, economic growth and jobs. We can't wait to work with his administration to spread Manchester's success to the rest of the country."
On Burnham's apparent plans for property tax reform Antonia Jennings, chief executive of Centre for London says debate is long overdue as the current system is broken. Jennings says not all models of reform would deliver fair outcomes for London, particularly those that favour a flat-tax rate. The Centre for London is proposing a partially devolved proportional tax.
"We’ve got a choice. Either, we create a nationally controlled property tax, that asks Londoners to pay more while giving them less say over how money is spent. Or we create a devolved model, that creates a fairer housing market, strengthens local government across the entirety of the UK and raises significant new funding for social housebuilding. If Andy Burnham is serious about devolution, that principal should apply first and foremost to tax policy.”
James Shorthouse, Colliers’ head of specialist markets, points out that one of the few things that Burnham has revealed about his policies has been to partly rebalance the business rates model to fund cuts for pubs and some high street businesses.
"Any such relief will be very welcome, but we would urge our new Prime Minister to take a holistic look at the overall tax burden faced by the hospitality sector and devise a package of measures to reduce the levels of National Insurance, business rates and VAT which are stifling investment and preventing the recruitment of young people into pubs, hotels and restaurants across" the United Kingdom.
Social housing pressure
On social housing, Gabor Taller, partner and co-head of social housing at law firm Browne Jacobson, says that Burnham's pledge to deliver the biggest programme of council house building since the Second World War is one of the most striking commitments of his campaign. "He has suggested funding it by redirecting the existing £39 billion affordable housing programme entirely towards social rent homes."
Taller says that while Burnham specifically references council housebuilding, the role he envisages for registered providers in achieving this remains unclear and the detail is yet to emerge. "That is significant, because the latest figures show registered providers have delivered more social rented homes than in any year in the last decade, demonstrating both their capacity and commitment.
“Burnham speaks of a national housing-first approach and building the broadest coalition possible – pointing to the Manchester model and its record of successful cross-sector working. Registered providers stand ready to be a central part of that effort.
“The shift in funding focus towards social rent is understandable, but I would encourage government not to abandon shared ownership entirely. It has often been unfairly conflated in the press with leasehold and fire safety concerns, but in the right location it remains a positive and much-needed bridge into home ownership."
RICS's Young said: “The Prime Minister’s commitment to reinvigorating council housebuilding is welcome, but ambition will need to be matched by delivery capacity. Local authorities will need the professional skills, resources and professional support to turn that ambition into homes.
“Above all, financial investment, both domestic and international is crucial for delivering so much of this. Creating a business environment which promotes confidence for investors goes together with regulatory and planning reform. Clarity and confidence is the motor for investment and results, not just for housebuilding, but across all sectors of the built environment."
Nick Leeming, chairman of residential agency Jackson-Stops, says its latest research suggests that removing stamp duty costs could bring more than 300,000 owner-occupied homes onto the market across England within less than a year. At the same time, 42% of those whose moving plans have been delayed cited economic uncertainty as a reason.
“The new government therefore has an opportunity to restore confidence in the market by combining a clear commitment to housebuilding with stable economic management and a serious review of the upfront costs that continue to hold back buyers and sellers. If that can be achieved, we should see momentum return, more transactions progress and more people able to move when the time is right for them.”
Lesson from Manchester
On devolution much has been made of the "Manchesterism" models that Burnham brings to the table from his time as the "king in the north" Mayor of Greater Manchester.
Laura Hughes, partner and head of public law, Browne Jacobson, said: “Deeper devolution that gives mayoral combined authorities genuine control over powers and finances relating to portfolios such as further education is a core Andy Burnham policy. It reflects what he’s built in Greater Manchester, where he has acknowledged prevention is better than cure."
Hughes points out that the Treasury was already developing a roadmap for fiscal devolution ahead of the Spending Review 2027, including proposals to let localities retain more benefit from local economic expansion.
“Burnham should accelerate this work and be explicit that it extends beyond England. The asymmetry between the devolved nations remains a structural problem – Wales and Northern Ireland do not enjoy the same degree of fiscal devolution as Scotland, and that imbalance creates real tensions in the intergovernmental landscape that no government has yet resolved. Burnham has already ruled out reforming the Barnett formula [which governs the changes to the annual grants]."
Oliver Bertram, spokesman for industrial development Panattoni, says the government’s Defence Investment Plan has placed drones and autonomous weapons at the centre of the UK’s defence strategy, with £5 billion earmarked for the subsector as part of a wider £15 billion uplift. Burnham has said he would take responsibility for fully funding the plan, arguing that the UK needs to “build the resilience” as the nature of the threat changes.
Bertram says that creates a major question beyond defence spending itself which is "does the UK have the industrial and logistics infrastructure to deliver at the speed required?"
"If the UK wants a resilient drone and autonomous systems industry, it will need the right warehouses, not just the right procurement commitments."
Bertram says modern big-box and advanced logistics facilities should be seen as part of the UK’s strategic industrial base, especially as sectors such as drones, autonomous systems, robotics, aerospace and advanced manufacturing become more important.